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LKP Finance Ltd.

BSE: 507912 Sector: Financials
NSE: LKPMERFIN ISIN Code: INE724A01017
BSE 14:55 | 17 Jun 107.00 -1.20
(-1.11%)
OPEN

108.50

HIGH

113.80

LOW

106.10

NSE 05:30 | 01 Jan LKP Finance Ltd
OPEN 108.50
PREVIOUS CLOSE 108.20
VOLUME 22904
52-Week high 139.00
52-Week low 46.40
P/E 5.59
Mkt Cap.(Rs cr) 135
Buy Price 107.00
Buy Qty 670.00
Sell Price 108.50
Sell Qty 25.00
OPEN 108.50
CLOSE 108.20
VOLUME 22904
52-Week high 139.00
52-Week low 46.40
P/E 5.59
Mkt Cap.(Rs cr) 135
Buy Price 107.00
Buy Qty 670.00
Sell Price 108.50
Sell Qty 25.00

LKP Finance Ltd. (LKPMERFIN) - Auditors Report

Company auditors report

To

The Members of

LKP Finance Limited

Report on the Audit of the Standalone Ind AS Financial

Statements

1. Opinion

We have audited the accompanying standalone Ind AS financial statements of LKPFinance Limited (“the Company”) which comprise the Balance Sheet as at 31March 2020 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of changes in equity and the Statement of Cash Flows for the year then ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as “the standalone financial statements”).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (“the Act”) in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended (“Ind AS”) and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31 March 2020 loss and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit of the standalone Ind AS Financial Statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the standalone financial statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone Ind AS financial statements.

3. Emphasis of Matter

As described in Note 29 (ii)(c) to the Standalone Ind AS financial statements StateBank of India obtained an order from Debt Recovery Tribunal (DRT) Bangalore againstKingfisher Airlines United Breweries (Holdings) Ltd and Others for recovery of dues fromthem. The Company received a garnishee order from the Recovery Officer DRT Bangalore

for an amount of Rs 2500 lakhs (plus interest) as the financial statements ofKingfisher Finvest Limited showed an amount of Rs 2500 Lakhs due from the Company. TheCompany has contested the same. The Company has deposited an amount of Rs 1126.22 Lakhswith the DRT which is on account of deposit for preferring the Appeal before DRATChennai. The matter is presently pending before the Debt Recovery Appellate TribunalChennai for hearing.

Our opinion is not modified in respect of this matter.

4. Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the year ended31 March 2020. These matters were addressed in the context of our audit of the Ind ASfinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

Key Audit Matter How our audit addressed the key audit matter
1. Non recognition of Deferred tax assets on carried forward tax losses and MAT credit entitlement We have considered the recoverability of such deferred tax assets on tax losses carried forward and MAT credit entitlement as a key audit matters due to the importance of management's estimation and judgment and the materiality of amounts at stake.
The Company's ability to recover deferred tax assets and MAT credit entitlement are assessed by management at the close of each financial year taking into account availability of sufficient future taxable income.
We reviewed the evaluation process of deferred tax assets on tax losses carried forward and MAT credit entitlement implemented by the Management.
We assessed the permanence of methods used the relevance and consistency of underlying assumptions (like earnings growth and applicable tax rates) and tested the arithmetic accuracy.
We assessed the probability that the company may not use in the future its deferred tax assets and MAT credit entitlement particularly with regard to the ability of the Company to generate sufficient future taxable profits in a foreseeable future allowing the use of existing tax losses carried forward and unrecognized MAT credit entitlement.
2 Transition to Ind AS accounting framework (as described in Note 46 to standalone financial statements) Read the Ind AS impact assessment performed by the Management and the resultant changes made to the accounting policies considering the requirements of the new framework.
The Company has adopted Ind AS from 1 April 2019 with an effective date of 1 April 2018 for such transition. For periods up to and including the year ended 31 March 2019 the Company had prepared and presented its financial statements in accordance with the erstwhile generally accepted accounting principles in India (Indian GAAP). To give effect of the transition to Ind AS these financial statements for the year ended 31 March 2020 together with the comparative financial information for the previous year ended 31 March 2019 and the transition date Balance Sheet as at 1 April 2018 have been prepared under Ind AS.
Evaluated the exemptions and exceptions allowed by Ind AS and applied by the Management in applying the first-time adoption principles of Ind AS 101 in respect of fair valuation of assets and liabilities existing as at transition date.
Tested the accounting adjustments posted as at the transition date and in respect of the previous year to convert the financial information reported under erstwhile Indian GAAP to Ind AS.
Tested the disclosures prescribed under Ind AS
The transition has involved significant change in the Company's policies and processes for financial reporting including generation of supportable information and applying estimates to inter alia determine impact of Ind AS on accounting and disclosure requirements prescribed under extant Reserve Bank of India (RBI) directions.
In view of the complexity involved Ind AS transition and the preparation of financial statements subsequent to the transition date have been areas of key focus in our audit.

5. Other information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Directors Report along withannexures but does not include the Ind AS financial statements and our auditor's reportthereon.

Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the Ind AS financial statements or our knowledge obtained inthe audit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

6. Management responsibility for the standalone Ind AS financial statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors areresponsible for overseeing the Company's financial reporting process.

7. Auditor's Responsibilities for the Audit of the Standalone Ind AS FinancialStatements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone Ind AS financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

8. Report on Other Legal and Regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2016 (“the Order”)issued by the Central Government of India in terms of sub section (11) of section 143 ofthe Companies Act 2013 we give in the “Annexure A” a statement on the mattersspecified in the paragraph 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Statement of Cash Flow dealt with bythis Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 from being appointed as a director in terms of Section164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in “Annexure B”.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the act as amended :

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid/payable by the Company to its directors during the yearis in accordance with the provisions of Section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any in respect of long term contractsincluding derivative contracts; and

iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company during the year.

For MGB & Co LLP
Chartered Accountants
Firm Registration Number 101169W/W-100035
Sanjay Kothari
Partner
Membership Number 048215
Mumbai 27 June 2020
UDIN: 20048215AAAACX4491

Annexure - A to the Independent Auditor's Report

Annexure referred to in paragraph 8 (1) under “Report on Other Legal andRegulatory Requirements” of our report of even date to the Members of the LKP FinanceLimited on the standalone Ind AS financial statements for the year ended 31 March 2020.

i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the management during theyear .In our opinion the frequency of verification is reasonable having regard to thesize of the Company and nature of its assets. According to the information andexplanations given to us no discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis ofexamination of records the title deeds of immovable property are held in the name of theCompany.

ii. The Company's business does not involve inventories and accordingly therequirements under clause 3(ii) of the Order are not applicable to the Company and hencenot commented upon.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct.

iv. As the company is a Non-Banking finance Company being engaged in the business offinancing Company provisions of Sec 185 and 186 of the Act is not applicable to theCompany. However the Company has complied with the provisions of Section 186 of the Actwith respect to investments made.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 to 76 of Sthe Act and the rules framed thereunder.

vi. According to Information and explanation given to us the Central Government ofIndiahas not prescribed the maintenance of cost records under Section 148 (1) of the Act forany of the services rendered by the Company.

vii. According to the records of the Company examined by us and information andexplanations given to us:

a) Undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax goods and service tax duty of customs duty ofexcise value added tax cess and others as applicable have generally been regularlydeposited with the appropriate authorities except delay in few cases. There are noundisputed amounts payable in respect of aforesaid dues outstanding as at 31 March 2020for a period of more than six months from the date they became payable..

b) There are no dues of income tax sales tax service tax goods and service tax dutyof customs duty of excise value added tax and cess which have not been deposited onaccount of any dispute.

viii. According to the records of the Company examined by us and the information andexplanations given to us the Company has not defaulted in repayment of loans orborrowings to banks. The Company has not taken any loans from Government and has notissued any debentures.

ix. In our opinion and according to the information and explanations given to us theCompany has not raised any money by way of initial public offer or further public offer(including debt instruments) or term loans during the year.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have been informed of any such case by theManagement.

xi. According to the records of the Company examined by us and information andexplanations given to us the Company has paid/provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company and the Nidhi Rules 2014 are not applicable to it.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 ofthe Act and details of such transactions have beendisclosed in the standalone Ind AS financial statements as required by the applicableaccounting standards.

xiv. According to the records of the Company examined by us and information andexplanations given to us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.

xv. According to the records of the Company examined by us and information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him

xvi. The Company is registered as Non-Banking Financial Institution (NBFI) and isholding a certificate of registration (CoR) from Reserve Bank of India to carry onbusiness of NBFI in terms of Sec 45-IA of the RBI Act 1934.

For MGB & Co LLP
Chartered Accountants
Firm Registration Number 101169W/W-100035
Sanjay Kothari
Partner
Membership Number 048215
Mumbai 27 June 2020
UDIN: 20048215AAAACX4491

Annexure - B to the Independent Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (“the Act”) as referred to in paragraph 8(II) (f)under “Report on other Legal and Regulatory requirements” of our report of evendate to the members of the Company on the standalone Ind AS financial statements for theyear ended 31 March 2020

We have audited the internal financial controls over financial reporting of LKPFinance Limited (“the Company”) as of 31 March 2020 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the“Guidance Note”) issued by the Institute of Chartered Accountants ofIndia(ICAI). These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on “ Audit of Internal Financial Controls over FinancialReporting” (the “ Guidance Note”) issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The Proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For MGB & Co LLP
Chartered Accountants
Firm Registration Number 101169W/W-100035
Sanjay Kothari
Partner
Membership Number 048215
Mumbai 27 June 2020
UDIN: 20048215AAAACX4491